L and medium sized firms are clueless about auto-enrolment, and unprepared for dealing with its requirements and duties, the Association of Consulting Actuaries (ACA) said today.
Some 28 per cent of respondents to an ACA survey had budgeted for the cost of enrolling their employees, while less than one in five respondents were even aware of all the detail of the auto-enrolment regulatory regime.
Over two fifths of firms who lack an existing pension scheme are unsure what plans they will enrol employees into – as well as over a quarter of those that have an existing scheme.
“In a three year period from mid-2014, over 1m small and medium enterprises will have to meet the auto-enrolment challenge, three quarters with four or fewer employees,” said ACA chairman Andrew Vaughan.
“Yes, it is right that pension provision should be available to employees in even the smallest firms,” Vaughan added, “But we do question whether the auto-enrolment rules are overly complex for businesses of this size and whether the strains of the staging timetable look too rigorous.”
Vaughan suggested the government might establish an “approved panel of advisers” who could “provide cost effective advice on auto-enrolment” to small businesses.
A Department for Work and Pensions spokesperson said: “The new duties will not apply to small employers until 2015 at the earliest. We have also launched an advertising campaign featuring TV stars such as Theo Paphitis and Nick Hewer to further raise awareness of the scheme.”
Small firms will be required to auto-enrol their employees into an eligible pension scheme between 2014 and 2017, with some newer firms being given till 2018. Only five per cent of firms in the ACA sample already auto-enrolled employees into a workplace pension scheme.
Employees that are auto-enrolled have an option to opt-out, but after three years their employer must auto-enrol them again. All employees will make one month’s worth of contributions – but those that decide to opt-out can claw these payments back.